JP/Australia-RI rift 'must not spill over into economy'

With tension still high between Indonesia and Australia, a number of business figures have urged the government not to let it spill over into the economy as this would only do more harm than good.

"We're afraid of the possibility of economically harmful actions, such as boycotts, in both countries," Association of Food and Beverage Industries chairman Thomas Darmawan told The Jakarta Post on Wednesday.

Indonesian goods were subjected to an Australian boycott in 1991 following the infamous Santa Cruz incident in what was then the Indonesian province of East Timor. Meanwhile, Australian goods have frequently been the subject of government-sponsored boycotts over the years in Indonesia.

Thomas' views were echoed by Handaka Santosa, the chairman of the Indonesian Retailers Association, and Ratna Sari Lopis, the chairwoman of the Flour Producers Association.

Relations between Indonesia and Australia have plunged once again following Australia's granting of temporary visas to 42 Papuans who arrived by boat in northern Australia in January seeking asylum.

The Indonesian government, and some sections of Indonesian society, have been enraged by the decision.

Exacerbating the situation was the publication of a crude cartoon of President Bambang Susilo Yudhoyono in Australia, following a local newspaper's publication of an equally crude cartoon of Australian Prime Minister John Howard and Foreign Minister Alexander Downer last week.

Susilo said afterwards that the government might reconsider various forms of cooperation between the two countries.

Against this backdrop, industry players here are concerned that the rift could affect business relations between the two countries.

Various groups have already staged rallies in a number of big cities around the country. In Makassar, the capital of South Sulawesi, a group of students ordered the Sahid Hotel in the city not to allow Australian tourists to check in, AFP reported.

Handaka urged the government to pursue a diplomatic solution to the problem so as to make sure it did not damage the economy. Ratna agreed, saying that with the economy still recovering, any disruption, however small, could eventually derail the entire process.

"We're currently dependent on Australian supplies of a number of raw materials for the food and beverage industry," Thomas said, citing as an example the fact that Indonesia imports 70,000 live cattle from Australia per year.

The government only permits the importation of cattle from Australia and New Zealand as the two countries are free of both foot-and-mouth and mad cow disease. "Particularly in the case of breeding stock, we can only import them from Australia," he said.

According to Ratna, Indonesia imports more than three million tons of wheat per year from Australia, or 70 percent of its total needs. The remainder is imported from the U.S. and Canada.

Indonesia also imports unprocessed sugar and salt, various kinds of cereals, vegetables, potatoes and milk products from Australia. Meanwhile, Indonesia's main exports to Australia consist of textiles, garments, animal feeds and crude oil.

Total trade between the two countries stood at US$4.8 billion last year, with Indonesia enjoying a balance in its favor of about $300 million.